Product Description

Decline can be avoided. Decline can be detected. Decline can be reversed. Amidst the desolate landscape of fallen great companies, Jim Collins began to wonder: How do the mighty fall? Can decline be detected early and avoided? How far can a company fall before the path toward doom becomes inevitable and unshakable? How can companies reverse course? In "How the Mighty Fall", Collins confronts these questions, offering leaders the well-founded hope that they can learn how to stave off decline and, if they find themselves falling, reverse their course. Collins' research project - more than four years in duration - uncovered five step-wise stages of decline: Stage 1: Hubris Born of Success; Stage 2: Undisciplined Pursuit of More; Stage 3: Denial of Risk and Peril; Stage 4: Grasping for Salvation; and, Stage 5: Capitulation to Irrelevance or Death. By understanding these stages of decline, leaders can substantially reduce their chances of falling all the way to the bottom. Great companies can stumble, badly, and recover. Every institution, no matter how great, is vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do. But, as Collins' research emphasizes, some companies do indeed recover - in some cases, coming back even stronger - even after having crashed into the depths of Stage 4. Decline, it turns out, is largely self-inflicted, and the path to recovery lies largely within our own hands. We are not imprisoned by our circumstances, our history, or even our staggering defeats along the way. As long as we never get entirely knocked out of the game, hope always remains. The mighty can fall, but they can often rise again.

Product Details

• Amazon Sales Rank: #1860 in Books
• Published on: 2009-06-04
• Original language: German
• Binding: Hardcover
• 256 pages

From the Inside Flap
Decline can be avoided.
Decline can be detected.
Decline can be reversed.
Amidst the desolate landscape of fallen great companies, Jim Collins began to wonder: How do the mighty fall? Can decline be detected early and avoided? How far can a company fall before the path toward doom becomes inevitable and unshakable? How can companies reverse course?
In How the Mighty Fall, Collins confronts these questions, offering leaders the well-founded hope that they can learn how to stave off decline and, if they find themselves falling, reverse their course. Collins’ research project—more than four years in duration—uncovered five step-wise stages of decline:
Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk and Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death
By understanding these stages of decline, leaders can substantially reduce their chances of falling all the way to the bottom.
Great companies can stumble, badly, and recover.
Every institution, no matter how great, is vulnerable to decline. There is no law of nature that the most powerful will inevitably remain at the top. Anyone can fall and most eventually do. But, as Collins’ research emphasizes, some companies do indeed recover—in some cases, coming back even stronger—even after having crashed into the depths of Stage 4.
Decline, it turns out, is largely self-inflicted, and the path to recovery lies largely within our own hands. We are not imprisoned by our circumstances, our history, or even our staggering defeats along the way. As long as we never get entirely knocked out of the game, hope always remains. The mighty can fall, but they can often rise again.

From the Back Cover
Whether you prevail or fail, endure or die, depends more on what you do to yourself than on what the world does to you.' Jim Collins

About the Author
Jim Collins is a student of companies - great ones, good ones, weak ones, failed ones - from young start-ups to venerable sesquicentenarians. The author of the international bestseller Good to Great and co-author of Built to Last, he serves as a teacher to leaders throughout the corporate and social sectors. His work has been featured in Fortune, Business Week, The Economist, USA Today, and Harvard Business Review. You can find more information about Jim and his work at his e-teaching site, www.jimcollins.com.

Customer Reviews

"All falling companies are alike; each of them falls in its own way."

In How the Mighty Fall, Collins examines how and why once great companies have since declined. Relying on many years of research of several thousand companies, he identifies five stages of organizational decline: Hubris Born of Success, Undisciplined Pursuit of More, Denial of Risk & Peril, Grasping for Salvation, and Capitalization to Irrelevance or Death. This is a process that can continue for many years and, frequently, is not recognized - or at least not taken seriously -- until it is too late. As Collins explains, "The origins of this work date back to more than three years earlier, when I became curious about why some of the great companies in history, including some once-great enterprises we'd researched for Built to Last and Good to Great, had fallen. The aim of this piece is to offer a research-grounded perspective of how decline can happen, even to those that appear invincible, so that leaders might have a better chance of avoiding their fate...By understanding the five stages of decline discussed in these pages, leaders can substantially reduce the chances of falling all the way to the bottom, tumbling from iconic to irrelevant. Decline can be avoided. The seeds of decline can be detected early. And as long as you don't fall all the way to the fifth stage, decline can be reversed. The might can fall, but they can often rise again."

These are the five stages to which Collins refers:

1. Hubris born of success: Faith and confidence become pride and arrogance. Leaders become careless and workers become complacent. "We're so great we can do anything!"

2. Undisciplined pursuit of more: That is, more scale, more growth, more acclaim, "more of whatever those in power see as `success' and allow their companies to "stray from the disciplined creativity that led them to greatness in the first place."

3. Denial of Risk and Peril: Although internal warning signs begin to mount, they are ignored because "external results remain strong enough to `explain away' disturbing data or to suggest that the difficulties are `temporary' or `cyclic' or `not that bad,' and `nothing is fundamentally wrong.'"

4. Grasping for salvation: The cumulative signs of peril and/or evidence of risks-gone-bad force leaders to decide: return immediately to being and doing what achieved greatness before or "grasp for salvation"? If the latter, the company will fall into Stage 4.

5. Capitulation to irrelevance or death: "The longer a company remains in Stage 4, repeatedly grasping for silver bullets, the more likely it will spiral downward. The process of erosion and deterioration continues until either the leaders just sell out or "the institution atrophies into utter insignificance; and in most cases, the enterprise simply dies outright."

Collins rigorously examines each of these five stages and suggests what lessons can be learned from companies that failed as well as other companies that fell and then rose again. For example, he explains how ten of the eleven great companies featured in Good to Great "fell [to Stage 2] despite showing behaviors contrary to complacency": Addressograph, Ames, Bank of America, Circuit City, HP, Merck, Motorola, Rubbermaid, Scott Paper, and Zenith. He then explains how each of the ten and A&P (that had shown signs of complacency) "grasped for salvation" in Stage 4.

With regard to fallen companies that rose again, Collins cites Xerox, Nucor, IBM, Texas Instruments, Pitney Bowed, Nordstrom, Disney, Boeing, HP, and Merck. "What do these companies have in common? Every one took at least one tremendous fall at some point in its history and recovered. Sometimes the tumble came early, when they were small and vulnerable, and sometimes the tumble came when they were large, established enterprises. But in every case, leaders emerged who broke the trajectory of decline and simply refused to give up on the idea not only of survival but of ultimate triumph despite the most extreme odds. And like [Anne] Mulcahy [CEO of Xerox], these leaders used decline as a catalyst. As Dick Clark, the quiet, longtime head of Merck manufacturing who became chairman after [Ray] Gilmartin, put it, "A crisis is a terrible thing to waste."

After reading this book, I have a much understanding of why so many of the companies that Tom Peters and Robert Waterman cite in Search for Excellence are no longer "excellent" or even in existence, as well as why so many of the companies cited by Collins and Jerry Porras in Built to Last are no longer "visionary" and why so of the companies that Collins cites in Good to Great are no longer great: they proceeded through a five-stage process of decline. Could they have avoided that process? Yes. Once embarked upon it, could they have reversed the process? Yes, at least before falling into Stage 5. With all due respect to Jim Collins' first two books, I think How the Mighty Fall (whose narrative is only 123 pages, followed by 83 pages of Appendices and Notes) will be his most valuable achievement thus far. Why? Because what he shares in it will help leaders to either avoid or recover from a subtle but relentless process of organizational suicide.

"Fire, Ready, Aim" Management Described

"Come, let us build ourselves a city, and a tower whose top is in the heavens; let us make a name for ourselves, lest we be scattered abroad over the face of the whole earth." -- Genesis 11:4

How the Mighty Fall takes a methodology similar to Built to Last and Good to Great and searches for differences among paired companies (Loser--Winner; A&P--Kroger; Addressograph--Pitney Bowes; Ames--Wal-Mart; Bank of America--Wells Fargo; Circuit City--Best Buy; Hewlett Packard--IBM; Merck--Johnson & Johnson; Motorola--Texas Instruments; Rubbermaid--None qualified; Scott Paper--Kimberly-Clark; and Zenith--Motorola) As you can see, it all makes for strange bedfellows (Motorola is on both sides of the divide and Rubbermaid doesn't have a winning comparison partner). As before, the analysis relies on public information from that period (such as annual reports, business journalism articles, and analyst reports).

From these data, Jim Collins discerns the following taxonomy of stages:

1. Hubris (excess pride) due to prior success
2. Undisciplined pursuit of more
3. Denial of risk and peril
4. Grasping for salvation
5. Capitulation to irrelevance or death

Reaching any one of these stages doesn't mean that stage 5 is inevitable in Collins' view.

The result is more like a monograph than a full business book with limited examples and observations. Many readers will find themselves hungering for more.

I was grateful to Mr. Collins for the excellent way that he defined and described his cases. As a result, I was able to look into what he was measuring to see what else might be there.

I had the good fortune to work with most of these companies as a consultant either just before or during the measurement period. As a result, I was able to think about what people inside the company had told me at the time about what they were doing and why they were doing it as well as what I observed about how they went about doing their work.

From those additional perspectives, I thought there were some other lessons:

1. Capable continual business model innovators (Kroger, Pitney Bowes, Wal-Mart, Wells Fargo, Best Buy, IBM, TI, and J & J) outperform those who mostly try to make old business models more efficient and effective.

2. Companies are more likely to try to do too much and swerve off in weird directions because the CEO feels insecure (Addressograph, Ames, Bank of America, Merck, Motorola, Scott, and Zenith) compared to a predecessor and the predecessor's track record (or a competitor CEO and that CEO's track record) rather than because of excess pride.

3. Denial of risk and peril arrives long before the company's performance peaks (Addressograph, Ames, Bank of America, Circuit City, Motorola, Scott, and Zenith). It just shows up as a problem later after a change in the environment causes the company to be exposed to worse results because of risk than before.

4. Ignorance about how to do big acquisitions successfully is rampant in large organizations (Ames, Hewlett Packard, Merck, and Motorola). Do a difficult large acquisition without understanding how to succeed, and you will probably fall flat on your face. Your stock will fall flatter than a pancake.

5. Pursuit of seemingly higher-growth markets is an irresistible lure for the portfolio-strategy-focused CEO (these names shall remain unidentified, but they know who they are) regardless of the real opportunity (think of the AOL-Time Warner merger).

This subject, I think, would be much better studied as a methodology by long-term tracking studies that include annual interviews and visits with a large number of competitors, customers, suppliers, and employees among the comparison companies. Perhaps someone from academia will move beyond the desire to write a quick case and do this kind of fundamental research to help answer the question: "How can we know when we are headed for a fall?"

Poor model- disappointed
This author promoted a "formula for success" in Good to Great and Built to Last- this seems like a poor excuse for a reason why those companies mentioned in those books failed.

The author's misconception is that a company's success is absolute. In order words this book really fails to take into account the actions of competitors and the dynamics of the market.

Companies do not achieve success or failure by following an over simplified model or set of steps.

Those people intersted in why companies fail should use industry models such as PESTLE analysis and Michael Porter's models to get an understanding of how external forces shape companies.

I would suggest "Business war games" by Benjamin Gilad rather than this book, which I felt was a "these are the reasons why my first books should not be discounted" excuse.